How penalty points expire and reset

Penalty points do not all disappear in the same way. The rule depends on whether you are still below the 4-point threshold or whether you have already reached it.

If you are still below 4 points

If you stay below the threshold, HMRC removes each point automatically 24 months after the missed deadline. You do not need to apply for that.

If you have reached 4 points

Once you reach the threshold, points do not fall away one by one. All of your points will only reset when both of these conditions are met:

• you send your quarterly updates and tax return on time for 12 months
• you send any outstanding quarterly updates and tax returns that were due in the previous 24 months

What this means in practice

If you are sitting on 4 points, simply waiting is not enough. You need a full period of on-time compliance and to clear anything HMRC is still waiting for from the last 24 months. Until both happen, you stay at the threshold.

Checking your points

You can sign in to your HMRC online services account to see the date your points will be removed. That is worth checking before you assume an old point has already dropped off.

If your circumstances change and you become exempt

If you become exempt in 2026 to 2027, you go back to the older Self Assessment penalties. If you become exempt in 2027 to 2028, you stay within the new penalty rules, but your threshold drops from 4 points to 2, and HMRC reduces your existing points so you are no closer to a penalty than you were before.